Refinance calculator

How much can refinancing your mortgage save you? Find out the quick and easy way with NerdWallet’s free refinance calculator.

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Current mortgage

What was your original mortgage amount?

Nerdy insight

When you first take out a loan, most of your monthly payments go toward paying
interest rather than principal.

Current mortgage

What was your original mortgage term?

Nerdy insight

Fixed-rate loans are offered in 30-, 20-, 15- and even 10-year terms. If you’re
refinancing from an adjustable-rate loan, be aware that your interest rate won’t
change during the life of the loan in a fixed-rate mortgage.

Current mortgage

What was your original mortgage interest rate?

Nerdy insight

Mortgage rates are still near historic lows. Refinancing could help lower your
monthly payments considerably if your current loan’s interest rate is much higher
than today’s rates.

Current mortgage

What was your initial origination year?

Nerdy insight

A lower monthly payment isn’t the only reason to refinance; you can also do a
cash-out refinance, switch loan types, or eliminate private mortgage insurance.

New mortgage

What is your new mortgage term?

Nerdy insight

A shorter-term loan saves money in interest, but the monthly payments are higher.
Choose a longer-term loan if you need lower monthly payments. But remember — you’ll
pay more in interest over the life of the loan.

New mortgage

What is your new mortgage interest rate?

Nerdy insight

We’ve provided Freddie Mac’s current refinance rate, but your actual rate will
depend largely on your credit score and credit history. Make sure both are in good
standing by getting your most recent credit report and addressing any errors or
issues.

When thinking about refinancing, it is most important for me to decrease:

Nerdy insight

Refinancing can decrease your monthly mortgage payment. Alternatively, you can decrease your total mortgage interest. Sometimes you can save on both.

Refinance calculator

How much can refinancing your mortgage save you? Find out the quick and easy way with NerdWallet’s free refinance calculator.

Get started

Current mortgage

What was your original mortgage amount?

Nerdy insight

When you first take out a loan, most of your monthly payments go toward paying
interest rather than principal.

Curious what your home is really worth?

How we calculate your refinance savings

Your total savings during the time you plan to stay in your home is made up of two parts: cash savings and the difference in the amount you’ll still owe on your new mortgage.

What are cash savings? That’s the difference between your current monthly mortgage payments and your new monthly mortgage payment (minus the amount you’ll need to pay for closing costs — about 3% of the loan). In other words, it’s cash in your pocket.

What’s the difference in the amount you’ll still owe? That’s the difference between the amount of principal on your current mortgage and the amount of principal you’ll owe on your new loan when you refinance.

Understanding the breakeven period

The breakeven period represents the number of years you’ll have to make the new monthly payment before you recoup the costs of refinancing.

Nerd Tip: It typically makes sense to refinance your mortgage if you’re planning to stay in your home for longer than the breakeven period.

How long do you plan to stay in your home, and why does it matter?

The first step in deciding whether or not to refinance is to estimate how long you plan to stay in your home. If you think you could be moving soon, it may not make sense to pay thousands of dollars in closing costs just to lock in a lower rate. Conversely, if you plan to stay in your home for the life of your loan, by refinancing and extending the loan term, you may save in cash payments for the first few years but end up paying more in total interest payments over the life of your new loan.

Why should you consider a mortgage refinance?

In many instances, you should refinance to save money on your home mortgage. You’re a good candidate to refinance if you’re planning to stay in your home for a while and are refinancing at a lower interest rate, switching off an adjustable-rate mortgage, or looking to eliminate private mortgage insurance.

The top reasons to refinance are:

Get a lower interest rate: Lowering your mortgage rate can reduce your monthly payment if the repayment term (duration) remains the same. However, keep in mind that a refinance can carry fees ranging from 2% to 5% of the loan balance due.

Mortgage refinancing for a lower rate can make a lot of sense, especially if your credit score has improved. In that instance, you might qualify for a significantly lower mortgage rate today. Check your credit score and history before you go any further.

Nerd Tip: Rather than simply focusing on reducing your monthly payment, it’s wiser to refinance when you can save money with a lower interest rate, without extending the loan term.

Switch from an adjustable-rate mortgage to a fixed rate: An adjustable-rate mortgage typically comes with an initial period of a steady interest rate then resets to a floating rate for the rest of the loan. It makes sense to use an ARM if you know you’ll live in a home for only a few years; you could save a lot of money with a lower interest rate in the interim.

Converting to a fixed mortgage from an ARM is especially useful if you plan to stay in your home long-term. For example, if you have a 5/1 ARM, you could complete a refinance by the end of the fifth year and lock in a steady rate with a 30-year fixed-rate mortgage.

Eliminate private mortgage insurance: If you buy a home with less than 20% down, you typically are required to pay private mortgage insurance, or PMI, which protects the lender in case you default on the loan.

Annual PMI premiums can cost between 0.5% and 1.5% of the mortgage. Sometimes, homeowners are able to cancel mortgage insurance once the balance on the mortgage falls below 80% of the value of the home. However, loans insured by the Federal Housing Administration require mortgage insurance for the entire life of the loan. Read more about FHA loans.

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